The company, which owns one fifth of the world's potash production capacity, forecast earnings of 55 cents to 75 cents per share for the first quarter, well below analysts' expectations of 84 cents, as economic turbulence rattled farmers and fertilizer dealers.

For 2012, Potash Corp expects to earn $3.40 to $4.00 per share, compared with Wall Street expectations of $3.96.

That outlook, along with a disappointing fourth quarter, was enough to generate a 5.5 percent share sell-off in pre-market trading, even though the company finished 2011 with its second-highest earnings ever. The shares recovered as markets opened, and were up almost 1 percent.

Profit expectations run high for a company with the dominant market share that looks set to gain as improving diets in developing countries like China and India boosts demand for grain, meat and fertilizer.

The first quarter looks weak, but shouldn't shock investors given similar signals earlier this month from rival Mosaic, said analyst Edlain Rodriguez of Lazard Capital Markets.

"Clearly this is a temporary issue in Q1 and as long as crop prices remain supportive, farmers will come back to the market," Rodriguez said.

Softer demand already has led Potash Corp to shut down potash production temporarily at three of its Saskatchewan mines this winter. The production cuts amount to 1.2 million tonnes, or 10 percent of Potash Corp's operational capacity.

Minnesota-based Mosaic (MOS.N) reported higher quarterly profit than expected earlier this month, but said volumes may remain sluggish into the spring, as distributors and farming customers remained cautious.

Potash Corp is bullish about 2012 and its longer-term future, and backed up its hopes by doubling its dividend on Wednesday.

"Although fertilizer purchasing patterns can shift for short periods, the need to improve crop yields and the science of fertilizer demand do not change," said Potash president and CEO Bill Doyle. "We understand the necessity of looking beyond short-term market fluctuations and preparing for the long-term growth that typically follows."

Global shipments of potash from all producers in 2012 are expected to range from 55 million tonnes to a record 58 million tonnes, the company said, with North American demand picking up later in the year and Brazilian farmers buying aggressively to boost large crops of soybeans, corn and sugar cane.

Talks have started on supplying China for the first half of the year. But near-term demand in India could be muted by factors including higher retail potash prices and port congestion, Potash Corp said.

The company's fourth-quarter earnings rose to $683 million, or 78 cents a share, from $508 million, or 56 cents a share, a year earlier. Analysts had on average expected a profit of 88 cents per share, according to Thomson Reuters I/B/E/S.

Sales volume for all three crop nutrients - potash, phosphate and nitrogen - tailed off in the fourth quarter.

Some see the company's near-term prospects fading, and two analysts downgraded Potash Corp ahead of its earnings report.

U.S. farmers are likely to plant a big crop of corn this spring, an intensive user of fertilizer. But greater supplies are likely to dampen grain prices and pressure fertilizer values, said Charles Neivert of Dahlman Rose & Co, in a note to clients on Wednesday.

"We see the best times for fertilizer moving into the rear-view mirror as high crop prices bring on the expected response from farmers - strong planting," Neivert wrote.

Potash - the common name for widely used crop nutrient potassium chloride - is only mined in a handful of countries. Canada, Belarus and Russia account for the vast majority of the world's production and exports.

Within the coming decade Potash Corp, Mosaic and Agrium (AGU.TO), which market overseas potash sales from Saskatchewan mines through a single joint venture, will account for more than 50 percent of the world's current production capacity.

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